Life Cycle Management

Product Life Cycle Stages

What You Need To Know About The Product Life Cycle Stages

The stages of the product life cycle refer to the evolutionary process that a product goes through from initial product development, to market introduction, growth, market maturity and the decline or stabilization stage. The stages of the product life cycle parallel the same biological and geological processes that govern human and biological life. The growth stage represents the most active stage as product sales are growing until such a point that the product reaches critical mass or is overtaken by new product developments or technological advancements. Product Lifecycle management refers to the process of managing each stage of the product life cycle and is a new business paradigm being adopted by leading companies to market products faster, provide better support for their use, and manage end-of-life better.

The initial product development stage of the product life cycle represents the highest deployment of capital as the company invests heavily in research and development and creating the production process to bring the product to market. This represents investment by the company with no returns generated during the product life cycle stage.

During the introduction stage of the product life cycle, the focus is on building market share and creating product awareness. Typically, the product commands a higher price because economies of scale have not been realized and the product has not reached critical production levels. Product availability is confined to only a few channels. Sales start to increase during the later stages but the company usually runs at a loss because the cost of operations exceeds revenue return.

During the growth stage of the product life cycle, production ramps up, sales are increasing and brand awareness becomes important. At this stage competitors are attracted to the market due to profitability and there is a fight for market share between competing producers. Price wars can erupt in attempt to win consumer support, consolidate brand awareness and win a larger percentage of the market.

The maturity stage of the product lifec ycle is characterized by sales growth reaching peak levels and beginning to stabilize or decline. Price wars intensify and producers focus their marketing efforts on differentiating brands. The market is very profitable at this level as public and product awareness are at their peak due to the operation of multiple marketing campaigns. Later in this product life cycle phase some producers start to leave the market as margins get squeezed and profitability starts to decline.

When the market enters the declining stage of the product life cycle, sales are diminishing and margins decline due to competing products and price competition. Cost cutting efforts become more prevalent and new innovation or products begin to emerge in response to changing consumer preferences or tastes. At this point some producers consolidate and buy out competitors who leave the market.